Supremes To Weigh In On HMO Review

July 2, 2001 (PLANSPONSOR.com) -Even as the US
Senate approved a patients' bill of rights, the US Supreme
Court said it plans to decide whether states may provide for
an independent medical review when health plan members have
been denied coverage.

The justices agreed to decide the issue after
conflicting appeals court rulings in Illinois and Texas,
despite the urging of the Justice Department to stay out of
the dispute while Congress considers federal legislation
that would require independent reviews in similar
cases.

The Supreme Court said it would decide the case from
Illinois (Rush Prudential HMO v. Moran) while holding
another from Texas. However, at least 37 states and the
District of Columbia carry laws on the books that require
health maintenance organizations to provide some form of
independent review of benefit denials.

Illinois Case

Debra C. Moran sued her HMO to recover $94,841 she paid
for surgery to correct the pain, numbness and decreased
mobility she suffered from a shoulder problem in 1996. She
had also consulted, at her own expense, the opinion of a
surgeon outside the network.

The HMO’s physicians concurred in the diagnosis, but
recommended a less-complicated and less-costly surgical
procedure. The HMO refused to honor Moran’s request for an
independent review of their decision until ordered to do so
by an Illinois court. The HMO then refused to pay, even
after that independent reviewing physician said Ms. Moran
should receive the more-expensive treatment.

Two Rush-affiliated thoracic surgeons confirmed the
diagnosis but recommended a standard, less-complicated
procedure. Moran filed suit in an Illinois state court when
the HMO didn’t act on her request for an independent
review. In the meantime, she opted to undergo the
more-complicated surgery.

The case was moved to federal court, which sided with
the HMO, ruling that the suit was pre-empted by ERISA. On
review, the Seventh US Circuit Court of Appeals in Chicago
reversed the decision and allowed Ms. Moran’s suit to
proceed. That court found that the Illinois
independent-review provision was a state law regulating
insurance and, as such, wasn’t pre-empted by ERISA.

Texas Case

A US appeals court in New Orleans had ruled that the
Employee Retirement Income Security Act (ERISA) and the
Federal Employees Health Benefits Act of 1959 preempted the
independent review process established under state law.
That Texas law was adopted in 1997 when President Bush was
governor of Texas.

The Texas patients’ bill of rights provided for
independent, physician review of health maintenance (HMO)
and preferred provider organizations (PPO), where care
recommended by an attending physician was deemed not to be
medically necessary. The Texas law had been challenged in
court by four Aetna subsidiaries, according to Reuters.